Mortgage Relief Bills Keep Moving
Two mortgage relief bills authored by Assemblymember John Harabedian advanced through the Assembly Banking and Finance Committee. The bills respond to ongoing recovery problems after the Eaton and Palisades fires, where homeowners remain displaced due to contamination in their standing home that survived the fires and insurance has yet to fully restore the home or where homeowners are unable to rebuild because of insurance claim delays, labor and material shortages, permitting backlogs, and rising construction costs. AB 238, signed in 2025, required mortgage servicers to offer up to 12 months of forbearance to homeowners whose properties were destroyed or rendered uninhabitable by the January 2025 LA wildfires, but survivors reported in a hearing last March that some mortgage servicers delayed or denied relief, prompting Harabedian to introduce AB 1847.
AB 1847 strengthens those protections by extending mortgage forbearance from 12 months to 36 months for Eaton and Palisades Fire survivors and pushing the deadline to request relief until January 7, 2029, while prohibiting late fees, foreclosure proceedings, negative credit reporting, and lump-sum repayment demands. It also adds a key repayment protection: mortgage servicers would have to offer borrowers the option to defer missed payments to the end of the loan term. That matters because AB 238 barred lump-sum repayment demands but did not clearly specify how missed payments had to be handled. In practical terms, AB 1847 gives homeowners more time to rebuild, resolve insurance claims, and avoid foreclosure while recovery is still underway.
The companion bill, AB 1842, would create a broader statewide emergency mortgage relief framework for future declared disasters, including wildfires, floods, and earthquakes. It would also require monthly reporting to the Department of Financial Protection and Innovation on forbearance requests, approvals, denials, and reasons for denial, and would allow borrowers to bring civil action against servicers that violate the law.